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Spain agrees to forgive part of Cuba's short-term debt

Source: Reuters - Tue 3rd Nov 2015
Spain agrees to forgive part of Cuba's short-term debt

In a new move aimed at strengthening bilateral economic relations, Spain has agreed to refinance €201.5 million in short-term debt Cuba owes the Spanish government.

On Monday, Economy Minister Luis de Guindos signed an agreement in Havana with Cuban Vice President Ricardo Cabrisas that paves the way for Spain to forgive part of the money it lent to Havana, including interest and penalties for late payments.

The money is owed to CESCE (Spanish Company for Insured Credit for Export), which earlier this year resumed short-term coverage for Spanish businesses in Cuba after it stopped covering investors in 2000 because of the size of the debt.

The agreement, which was signed at the the Council of State's headquarters in Havana, came after government officials from both sides held talks in July in Madrid to bolster relations, including cooperation in joint research and development projects.

Spain has been anxious to strengthen its economic ties with Cuba now that the United States has begun a process of normalizing relations with the government of Raúl Castro, a move that is expected to lead to more foreign investment in the island.

This summer, Castro agreed to renegotiate Cuba's debt, which he estimated stands at $15 billion (€13.7 billion), with 16 creditor nations belonging to the Paris Club, an informal group of official creditors who seek solutions to payment difficulties experienced by debtor countries.

Cuba's debts with Spain total about €535.6 million, but this figure had increased five-fold in the last three decades with interest and penalties for late payments.

"As new stages and new opportunities are opening, I'm convinced that Spain – as occurs in foreign trade and in many other markets – will play a fundamental role, especially given the long-standing relationship with Cuba," Efe news agency reported De Guindos as saying.

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